I fixed the displacement warping issue by taking the file into Photoshop and softening the contrast around the warped area, but leaving the rest as it was. This leaves the rest of the arm with the desired amount of detail from the displacement map, while giving the previously-warped section a reduced effect.

However, saving the .exr out from Photoshop heavily reduced the contrast of the map, so it took a bit of time to get all of the settings correct to give the arm a look that is consistent with the rest of the model.